Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org New New-to to-Market Products Market Products - immr Perspectives on Estimating Demand, Sizing Markets immr Perspectives on Estimating Demand, Sizing Markets February 2010 Dr. Phil Hendrix Director, immr Contact : www.immr.org 1 (770) 612-1488 [email protected]
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Estimating Potential For New To Market Products 201002
Describes challenges in estimating potential and demand for "new-to-market" products and services. Outlines approaches and tools that yield more valid (e.g., more accurate) conclusions. Dr. Phil Hendrix, immr
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1 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
NewNew--toto--Market ProductsMarket Products-- immr Perspectives on Estimating Demand, Sizing Marketsimmr Perspectives on Estimating Demand, Sizing Markets
3 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
New-to-Market Product Research is Challenging
Challenge ExplanationResulting ErrorsType 1
(Overestimate)Type 2
(Underestimate)
AdequatelyDescribing Concepts
Ø Brief, partial description requires respondents to “fill-in-blanks” ü üØ Drawbacks not mentioned, shown, or made explicit ü üØ Text-only description fails to convey aesthetic, design features ü üØ Respondent unable to experience, assess user experience ü ü
Consumers’ Understanding
Ø Respondents pay less attention, devote less effort to tasks ü üØ Key FAQs unanswered (in both research and real world) ü ü
Measurement Ø Reliability of single measures weak ü üØ Expected time of purchase not explicitly measured ü ü
ScenariosTested
Ø Purchase probability (stated/actual) depends on scenarios (features, pricing, availability, and other key aspects) ü ü
Ø Scenarios tested fail to take into account competition, constraints ü üMotivation Ø Respondents not motivated to be thoughtful, “accurate” ü üHurdles Ø Impact of hurdles in Conversion Funnel not taken into account ü üMarket Conditions
Ø Actual product differs from product(s) tested ü üØ Actual competitive offers differ from the offers tested ü üØ Actual shopping, deciding requires more effort than in research ü üØ Projections fail to take into account network, viral effects ü ü
13 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
Rigorous, Disciplined Approach Improves ValidityLearning Approach/Tool Description – Examples Available Upon Request
Present Concepts Clearly, Adequately
1 Concept Elaboration Adequately describe and explain concept, features so that respondents understand, can evaluate, and reliably decide (see p. 15)
2 Storyboards, Multimedia
Use storyboards and multimedia, as appropriate, to describe the concept, explain key features, and highlight benefits
3 Virtual Prototypes Especially when usability is “suspect,” develop virtual prototypes that allow consumers to interact with, “use,” experience product
4 faqfind™ Make additional information about concept readily accessible, track how consumers access and use as they “shop” and decide
5 Qualitative Pretest Verify “usability” of concept descriptions, materials, and research tasks
Obtain Valid, Robust Measures
6 Incentive Compatible Motivate respondents to be “truthful” in answering “will you buy?”
7 Visualization Prompt respondents to visualize whether, when, how they might use
8 Robust Choice Models Match choice methodology to objectives, task, competitive realities
9 User-friendly Choice Tasks
Create “highly usable” choice tasks using IA (Information Architecture) principles (navigation, iconography, format, colors, etc.)
10 Timing measures Measure when respondents are most likely to adopt
14 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
Elaborating Concepts for Testing is CriticalGoals of Concept Elaboration
Ü Describe and explain concept concisely, in plain terms easily understood by the average provide consumer
Ü Provide enough information so that respondents can reliably evaluateÜ Guide development, selection of images and multimedia that can efficiently
communicate and reinforce the textual description
Concept Elaboration – Key Elements to Specify
Name* A descriptive name that captures/conveys the essence of the concept
Tagline A memorable phrase that captures/conveys the key benefit(s)
Target Description of who is likely to find it most useful? Why? "How would I know it's for me?"
Description* With as few words as possible, describe the concept. In as few sentences as possible, describe what "job" it does. In quantitative research, make a more complete description available to respondents throughout survey as pop-up (accessed by clicking ▲).
Explanation In as few words as possible, explain how the concept works. Answer the question, “Why should I believe the claim(s)?”
Benefits* What are the key benefits? What problem(s) does the concept solve?
Reference How is it similar to/different from what I'm familiar with, accustomed to, currently using, etc.?
Requirements What do I have to do to purchase, install, or use the service? (e.g., equipment required; where the service can be used; any drawbacks or limitations that need to be considered?)
* Required; other elements optional, but likely to be useful in developing other materials (especially illustrations, faqfind)
15 Permission granted to cite, copy and distribute with attribution - Dr. Phil Hendrix - immr - www.immr.org
Quantifying Demand for NTM Products – Toolkit
Adoption Model for “Very New Products”
Develop questions, hypotheses using theory of characteristics that influence adoption:• Need(s), priorities• Awareness, familiarity• Curiosity, skepticism• Ability/willingness to pay
Better Measures, Understanding
Storyboards and Virtual Prototypes
Use storyboards, virtual prototypes so that respondents can:
Develop, present sets of offers to respondents by varying product and service features (including price) Use adaptive approach to distinguish “must haves” from features willing to “trade-off”
Accurate “What if” Predictions
faqfindTM
Develop, present user-friendly set of FAQs to respondents
As respondents access FAQs, track information accessed, viewed by each respondent
Summarize, relate FAQs to choices, adoption, WTP
Reveals “Need to Knows”
Demand Model
Estimate model to predict:• Market Potential• Time to adopt• Demand under various
assumptions, scenarios• Price elasticity, impact of
other key drivers
Business Case Projections
ProspectSegmentation
Identify segments using LC/ummixing. Profile in terms of:• Size, potential• Purchase probability• Adoption triggers• Demographics• Optimal Positioning
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About the Author
Dr. Phil HendrixDirector, immrwww.immr.org+1 (770) [email protected]
Dr. Phil Hendrix is the founder and director of immr, a research and consulting firm focused on “very new” product and market opportunities. He specializes in helping organizations identify, verify, and capitalize on opportunities for products that are new-to-customers and very often new-to-market. Dr. Hendrix has developed perspectives and research-based tools to uncover customers’ unmet needs, reveal hurdles slowing adoption, trigger interest and accelerate purchase, and determine features and pricing to maximize market penetration. He has extensive experience adapting and applying research approaches, both qualitative and quantitative, to amplify weak market signals and help clients innovate successfully.
Phil has led significant engagements with numerous startups (such as Company.com) and multiple business units of Fortune 100 clients in telecommunications (AT&T, Verizon, Sprint, Sony Ericsson, and others), financial services (American Express), transportation (UPS), insurance (Allstate, United Healthcare), healthcare (US Oncology), and others. He has worked closely with senior management and client project teams on issues ranging from “traditional marketing” (segmentation, positioning, branding) to innovation, user experience, and customer retention. Over the course of his career, Phil has helped clients conceive and successfully launch dozens of new products, businesses, and brands. He has extensive experience in B2C and B2B (SMB) markets. He is also a frequent speaker at industry and academic conferences.
Phil brings a unique combination of academic rigor, strategic perspective, and hands-on experience to his work. Before founding immr, Phil was a partner with DiamondCluster (strategy and technology consultancy), founder and head of IMS (Integrated Measurement Systems), and a principal with Mercer Management Consulting. He has held faculty and research positions at Emory University and the University of Michigan, where he taught courses in research design and analysis, buyer behavior, and marketing strategy, and the Survey Research Center at U. of Michigan. After receiving his PhD in marketing from the University of Michigan, Dr. Hendrix completed post-doctoral studies in applied statistics and mathematical psychology.